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REVENUE AND CONTRACT ACCOUNTING
 6 Months Ended
Jun. 30, 2023
Revenue from Contract with Customer [Abstract]  
REVENUE AND CONTRACT ACCOUNTING

NOTE 6 - REVENUE AND CONTRACT ACCOUNTING

 

Revenue Recognition and Contract Accounting

 

The Company generates revenue from four sources: (1) Technology Systems; (2) AI Technology which is included in the consolidated statements of operations line-item Technology Systems; (3) Technical Support; and (4) Consulting Services which is included in the consolidated statements of operations line-item Services and Consulting.

 

Contract assets and contract liabilities on uncompleted contracts for revenues recognized over time are as follows:

 

Contract Assets

 

Contract assets on uncompleted contracts represent cumulative revenues recognized in excess of billings and/or cash received on uncompleted contracts accounted for under the cost-to-cost input method, which recognizes revenue based on the ratio of cost incurred to total estimated costs.

 

At June 30, 2023 and December 31, 2022, contract assets on uncompleted contracts consisted of the following:

        
  

June 30,

2023

  

December 31,

2022

 
Cumulative revenues recognized  $8,278,099   $5,934,205 
Less: Billings or cash received   (7,271,308)   (5,508,483)
Contract assets  $1,006,791   $425,722 

 

Contract Liabilities

 

Contract liabilities on uncompleted contracts represent billings and/or cash received that exceed cumulative revenues recognized on uncompleted contracts accounted for under the cost-to-cost input method, which recognizes revenues based on the ratio of the cost incurred to total estimated costs.

 

Contract liabilities on services and consulting revenues represent billings and/or cash received in excess of revenue recognized on service agreements that are not accounted for under the cost-to-cost input method.

 

At June 30, 2023 and December 31, 2022, contract liabilities on uncompleted contracts and contract liabilities on services and consulting consisted of the following:

        
  

June 30,

2023

  

December 31,

2022

 
Billings and/or cash receipts on uncompleted contracts  $972,900   $4,355,470 
Less: Cumulative revenues recognized   —      (4,144,018)
Contract liabilities, technology systems   972,900    211,452 
Contract liabilities, services and consulting   1,466,740    746,545 
Total contract liabilities  $2,439,640   $957,997 

 

Contract liabilities at December 31, 2022 were $957,997; of which $211,452 for technology systems and $456,080 in services and consulting has been recognized as of June 30, 2023

 

The Company expects to recognize all contract liabilities within 12 months from the respective consolidated balance sheet date.

 

Disaggregation of Revenue

 

The Company is following the guidance of ASC 606-10-55-296 and 297 for disaggregation of revenue. Accordingly, revenue has been disaggregated according to the nature, amount, timing and uncertainty of revenue and cash flows. We are providing qualitative and quantitative disclosures.

 

Qualitative:

 

  1. We have four distinct revenue sources:

 

  a. Technology Systems (Turnkey, engineered projects);

 

  b. AI Technology (Associated maintenance and support services);

 

  c. Technical Support (Licensing and professional services related to auditing of data center assets); and

 

  d. Consulting Services (Predetermined algorithms to provide important operating information to the users of our systems).

 

  2. We currently operate in North America including the USA, Mexico and Canada.

 

  3. Our customers include rail transportation, commercial, government, banking and IT suppliers.

 

  4. Our services & maintenance contracts are fixed price and fall into two duration types:

 

  a. Turnkey engineered projects and professional service contracts that are less than one year in duration and are typically one to two quarters in length; and

 

  b. Maintenance and support contracts ranging from one to five years in length

 

 Quantitative:

 

For the Three Months Ended June 30, 2023

                    
Segments  Rail   Commercial   Government   Artificial Intelligence   Total 
Primary Geographical Markets                    
                     
North America  $1,537,286   $42,381   $—     $190,392   $1,770,059 
                          
Major Goods and Service Lines                         
                          
Turnkey Projects  $856,942   $13,552   $—     $—     $870,494 
Maintenance and Support   680,344    28,829    —      —      709,173 
Algorithms   —      —      —      190,392    190,392 
   $1,537,286   $42,381   $—     $190,392   $1,770,059 
                          
Timing of Revenue Recognition                         
                          
Goods transferred over time  $856,942   $13,552   $—     $—     $870,494 
Services transferred over time   680,344    28,829    —      190,392    899,565 
   $1,537,286   $42,381   $—     $190,392   $1,770,059 

 

For the Three Months Ended June 30, 2022

                     
Segments  Rail   Commercial   Government   Artificial Intelligence   Total 
Primary Geographical Markets                    
                     
North America  $3,315,171   $26,697   $38,737   $236,537   $3,617,142 
                          
Major Goods and Service Lines                         
                          
Turnkey Projects  $2,675,426   $—     $18,517   $—     $2,693,943 
Maintenance and Support   639,745    26,697    20,220    150,435    837,097 
Algorithms   —      —      —      86,102    86,102 
   $3,315,171   $26,697   $38,737   $236,537   $3,617,142 
                          
Timing of Revenue Recognition                         
                          
Goods transferred over time  $2,675,426   $—     $18,517   $—     $2,693,943 
Goods delivered at point in time  —      —      —      86,102    86,102 
Services transferred over time   639,745    26,697    20,220    150,435    837,097 
   $3,315,171   $26,697   $38,737   $236,537   $3,617,142 

  

 For the Six Months Ended June 30, 2023

                     
Segments  Rail   Commercial   Government   Artificial Intelligence   Total 
Primary Geographical Markets                    
                     
North America  $3,913,735   $71,212   $11,353   $418,047   $4,414,347 
                          
Major Goods and Service Lines                         
                          
Turnkey Projects  $2,684,706   $13,552   $—     $—     $2,698,258 
Maintenance and Support   1,229,029    57,660    11,353    —      1,298,042 
Algorithms   —      —      —      418,047    418,047 
   $3,913,735   $71,212   $11,353   $418,047   $4,414,347 
                          
Timing of Revenue Recognition                         
                          
Goods transferred over time  $2,684,706   $13,552   $—     $—     $2,698,258 
Services transferred over time   1,229,029    57,660    11,353    418,047    1,716,089 
   $3,913,735   $71,212   $11,353   $418,047   $4,414,347 

 

For the Six Months Ended June 30, 2022

 

Segments  Rail   Commercial   Government   Artificial Intelligence   Total 
Primary Geographical Markets                    
                     
North America  $4,322,444   $43,997   $190,879   $499,138   $5,056,458 
                          
Major Goods and Service Lines                         
                          
Turnkey Projects  $3,196,081   $(498)  $150,438   $—     $3,346,021 
Maintenance and Support   1,126,363    44,495    40,441    281,847    1,493,146 
Algorithms   —      —      —      217,291    217,291 
   $4,322,444   $43,997   $190,879   $499,138   $5,056,458 
                          
Timing of Revenue Recognition                         
                          
Goods transferred over time  $3,196,081   $(498)  $150,438   $—     $3,346,021 
Goods delivered at point in time  —      —      —      217,291    217,291 
Services transferred over time   1,126,363    44,495    40,441    281,847    1,493,146 
   $4,322,444   $43,997   $190,879   $499,138   $5,056,458